How does this relate to newspapers?

April 22, 2010 at 2:48 pm Leave a comment

The Internet will eventually replace newspapers for many of the reasons that socialism will eventually replace capitalism (see previous post).

Media consolidation over the past 20 years has pushed out small firms and, with them, most voices. Most daily newspapers today monopolize their respective cities and are owned by a handful of corporations. In 2006, McClatchy bought Knight Ridder, effectively merging the first- and second-largest newspaper publishers in the U.S. Twelve of the newspapers McClatchy acquired in that deal were then sold because they “didn’t fit its longstanding acquisition philosophy of buying newspapers in fast-growing markets.”

At least that’s how McClatchy tells it. A more critical source might say that the sales were the result of shareholders’ demands.

The decision by newspaper publishers to turn their businesses public during the 20th century was the first nail in the coffin for the industry. Without the competition now provided by the Internet, profit margins hovered around 30 percent year after year. After a while, shareholders came to expect it. The industry coasted.

Industries fall victim to creative destruction when they start taking their privileged positions for granted.

In order to stay relevant, industries should seek not to make money, but to meet their consumers’ needs and wants. If they do, they will make money.

Example: Blockbuster and Hollywood Video were in the business of making money, not supplying movies. If they were really in the business of providing entertainment, they would have been innovating the whole time. They would have come up with Netflix.

I leave you with the words of Bill Moyers, former White House Press Secretary, journalist, and a leading authority on the American media:

“Virtually everything the average person sees or hears outside of her own personal communications is determined by the interests of private, unaccountable executives and investors whose primary goal is increasing profits and raising the company’s share price…The greatest challenge to the conglomeration of the media giants and the malevolent mentality of the partisan press is the innovation and expression made possible by the digital revolution.”

Knight Ridder Agrees to Sale

The McClatchy Company: Overview

Bill Moyers on Journalism and Democracy


Entry filed under: Uncategorized.

Introduction to Destruction Hearst Corporation: Leading the Way

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